King Yao: author of Weighing the Odds in Sports Betting and Weighing the Odds in Hold'em Poker

Monday, October 24, 2005

Sports: What to think about when betting NFL futures

Sports: What to think about when betting NFL futures

When people think about betting NFL futures, they typically ask themselves the typical questions: “Who do I think will win the Super Bowl?” “Who do I think will win the NFC?” And then they proceed to bet on the team they like. A few more savvy players will bet on teams they think have value. That is, teams that they may not think is the favorite to win, or the most likely to win, but teams they think are being offered better odds than they are worth. I do not like this approach.

I think the better approach is to handicap how the market will place the playoff teams in the money line throughout the playoffs.

Example:

Let’s say it is in late December and the Chicago Bears have wrapped up the NFC North and you are looking to bet them to win the NFC. Assume the Bears only have a 7-7 record, but they have a 2 game lead over the other crappy teams in their division, so they have clinched their division. Since it is clear they won’t be getting a bye in the first round, it means they will have to play three games in order to win the NFC. Is 20-1 worth the price? Some may look at it and think that they are only one of 6 teams to make the playoffs in the NFC, so it is worth it, but here’s a better way to evaluate it:

1. In the first game, they play a Wild Card team. Since they won the division, the Bears will play at home. But likely, the wild card team will be a better team, a team that didn’t win their division but still had a 10-6 or 9-7 record. The Bears will be playing at home, and historically, home playoff teams have had great against the spread and straight up records, so the Bears will get a small boost in the line. But still, it is likely they will only be a small favorite. Given the situation, I would peg them as a 1 point favorite, about 52% to win the game.

2. If they win the first game, then they will have to travel and play one of the teams that received a bye. It is still late October as I type this, but it looks likely it will be a strong team like the Atlanta Falcons or the Philadelphia Eagles. Teams that don’t play in the first week are typically big favorites at home in the second week. Given that the Bears are relatively week, and both ATL and PHI are considered the cream of the crop in the NFC, it means the Bears may be getting as much as 10 points in that 2nd game. Getting 7 points is about a 25% chance of winning. Getting 10 points is about a 20% chance of winning. Let’s use an in-between number and use 22.5%

3. If they win the second game, it is likely they’ll have to travel again for the conference finals. Since they were such big dogs in the 2nd game, if they win it, it is likely they won in a close game rather than a blow-out. The other team is more likely to win in a blow-out, so there is a chance the line for the NFC Conference game is still very high. For example, let’s say the Eagles finish the season 11-5. They’ll be going for their second NFC Championship, and have been in that game each of the last 4 years. With big stars like McNabb and Owens, clearly they will be a big favorite. So I would peg the chances of the Bears winning the last game against a team like the Eagles at close to the same as the 2nd game – 22.5%. There is some hope for the Bears though – it is possible the other game in the 2nd round is an upset too, so they may be playing the third or lower seed. So maybe this boosts their chances of winning the NFC Championship game (once they get there) up to 26%. This is a rough estimate.

So now we have the estimated probabilities. Yes, they are rough estimates, but they still have value.

Game 1: 53%Game 2: 22.5%Game 3: 26%

Multiply them all, and the answer is 3.1%. That’s about 31-1. Betting them at 20-1 is not a good bet. One can synthetically get better than 20-1 odds by just betting the Bears in each of these weeks. Of course there is the risk that the estimated line is wrong, but that is where your skill comes into play.

It gets more complicated when the season is still young as it is now (late October). There are still many possible derivations of playoff matchups. Except for the Colts, who seem to be in line to get home field advantage throughout the playoffs, it seems difficult to peg any other team. As for the Colts – I would estimate them having a very high chance of getting the top seed in the AFC. As high as 80% given their schedule and their lead on the rest of the AFC teams right now. If they play two games at home, it would not be surprising to see them as 10 point faves in the first game and 7 point faves in the AFC Championship game. 10 point faves = 80%, 7 point faves = 75%. So just off of this derivation where they win the top seed, they would be 80% x 80% x 75% = 48% to make it to the Super Bowl. This is without adding for the 10% of the time when they get the second seed or the wild card. Can one stomache betting a team as a favorite to make it to the Super Bowl at this early stage in the season? Most people won’t, even though they think IND is a great team, but when you look at the specific numbers, it becomes clear that it’s not a bad bet to take them at even money to win the AFC.

Without figuring out the expected probability for the playoff games, one would be hard pressed to get such low odds for a team to reach the Super Bowl. Bettors may be more likely to take a long shot like the Bears at 20-1 than the Colts at even money, even if the playoffs started today. This is one of the few times when the favorites in sports may actually be a solid bet.